How do I pass down my royalties to my heirs?
For many business owners, artists, and others, intellectual property rights comprise a valuable and significant part of your estate. Intellectual property rights may include copyrights, patents, and trademarks. In addition to ownership of intellectual property rights, royalties stemming from the use of your intellectual property rights by another can produce ongoing income. Intellectual property rights are an often overlooked category of assets that must be carefully included within your California estate plan.
Wills vs. Trusts When Passing Down Intellectual Property
You have two main options when it comes to passing down your intellectual property rights to your heirs: using a will or a trust. With a will, you can name whom you want to receive your intellectual property and royalties. All assets passed down in the will must go through probate, which is a lengthy and costly procedure. Intellectual property rights and royalties will require time and money to properly transfer to the named beneficiaries, and the overall estate may be diminished by taxation and attorney’s fees.
A trust offers a superior way to transfer your intellectual property and royalty rights. As with a will, a trust allows you to name who you want to receive your assets, but critically all assets held within the trust can pass without the need for probate. In this manner, a trust saves your estate significant money and will save your heirs from the lengthy delays associated with probate.
To provide potential benefits, a trust must be carefully constructed and all assets must be properly transferred to it. If you make a trust, but fail to transfer ownership of your intellectual property rights and royalties to it, then the assets will still need to go through probate. Proper transfer of intellectual property could require contacting the government agency that issued the intellectual property, while transfer of royalties generally will require contacting the publisher or other agency. These rights are not always easily transferred and you will want to contact an experienced estate planning attorney to be sure your intellectual property and royalty assets are properly passed down to your heirs in the best possible manner.
